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Monday, 8 October 1984
Page: 1394

Senator WATSON(5.16) —I move:

That the Senate take note of the paper.

I welcome the report by the Australian Science and Technology Council on Government purchasing and offset policies in industrial innovation. I believe that the report is a valuable contribution to the high technology debate as it identifies new and necessary approaches needed to ensure that Australia does not miss out on this important bandwagon. The report also coincides with a report from the Auditor-General who called for clarification of the relationship between Australian industry participation programs and the offset policy. The Auditor-General found that there were weaknesses within the secretariat for identifying and recording purchases to which the offset policy applied. I think it is unfortunate that that is the case. I applaud the Auditor-General on his report. First and foremost, Australia does need a long term, realistic direction which is enthusiastically supported by government policies and community attitudes. The slow and painful demise of our manufacturing industries has injected an air of resignation into the economic climate which does not encourage risk-taking in the market place. Australia's apparent reliance on foreign technology could produce a complacency which is not conducive to aggressive product and process innovation.

Other barriers such as State competition, excessive regulation and paranoid intervention do not contribute to the foundation of a confident domestic base from which Australia's technological potential could be realised or maximised. The fact that Australia in only a small trading nation augments the argument which calls for specialisation in areas where we display a particular talent, such as the biological sciences. There is a problem that if we laboriously endeavour to embrace the whole spectrum of high technology we could unnecessarily duplicate overseas efforts and have insufficient resources to reward innovation as deserved.

As of March 1984 Australia had a very low percentage of expenditure on technology in comparison with that of other Organisation for Economic Co- operation and Development nations. While the case for increased expenditure is naturally strong a re-organisation of current expenditure priorities, I think, is desirable. Funding emphasis on recurrent activity would be lessened while innovative activity is strengthened. After all, activity close to the product provides immediate gains. Government policies should assist Australian industries in a manner which do not eventually and inevitably necessitate excessive protection in order to prevent obsolescence. We must not build costly white elephants. For example, some of the facilities at the Government Aircraft Factories in Victoria could easily fit into this category if it is logically expected that the Royal Australian Air Force will take over the servicing of the new McDonnell fighter. Although not publicly acknowledged within the confines of the technical corridors of overseas board rooms, overseas manufacturers of defence hardware regard Australia as a very soft negotiator, in terms of not only the offset arrangements but also the inadequacies of after-sales service and warranties of goods supplied. The weakness of the rear section of the F18 aeroplane from the United States is a good example, and the latest of a very long list of problems where the Australian Government will pay more than originally intended or expected. With the principal potential suppliers for the helicopter contract busily explaining the benefits of offsets to Australian industry, once the contract is signed the successful tenderer will, if true to past form, then set about satisfying the Government as to why Australian industry is incapable of meeting specifications, tolerances and time delivery.

Unfortunately, governments are all too ready to accept these kinds of arrangements, to the detriment of Australian industry. If our position is assessed realistically and positively and if our weaknesses are acknowledged, technological innovation which is appropriately rewarded will play a vital role in restoring Australia's declining living standards. I support the report.

Question resolved in the affirmative.